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Test Description: WISE test review questions
Instructions: Answer all questions to get your test result.
1) To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and
A
her total income
B
whether the bank offers overdraft protection.
C
the rate of inflation
D
whether the account is FDIC protected
2) If a person has $1,000 in a savings account and earns $20 a year in interest on that account, the rate of return on the money is close to
A
5%
B
20%
C
2%
D
10%
3) Money recieved today is worth more than the same amount of money received sometime in the future is
A
investing
B
the time value of money
C
not true
D
the Rule of 72
4) The Rule of 72 is an easy way to
A
calculate the length of time it takes to pay off a credit balance
B
calculate how fast your savings will double in value at given interest rates
C
calculate how much tax you will owe on the interest earned
D
approximate your savings balance each year
5) Why might rising interest rates depress stock prices?
A
Rising interest rates usually means the economy has less.
B
Rising interest rates can result in lower business profits.
C
Stock investors are lured away from interest-paying investments to stocks.
D
Rising interest rates can result in higher business profits.
6) The amount a lender charges to borrow money is
A
Annual Percentage Rate (APR)
B
Loan Balance
C
principal
D
Finance charge
7) Which type of financial institution usually pays the highest rate of interest on savings account balances?
A
commercial banks
B
investment firm money market accounts
C
credit unions
D
savings and loan associations
8) The time value of money refers to the concept that money:
A
is the foundation for developing a financial plan
B
received today is worth more than the same amount of money received in the future.
C
money will double in value over seven years
D
changes in value along with interest rates
9) Lamar believes that interest rates are going to fall in the near future and remain low for a considerable period of time. She should invest in:
A
a variable rate certificate of deposit
B
nothing, she should put money under her mattress
C
a long-term, fixed rate certificate of deposit
D
a short-term, fixed rate certificate of deposit
10) What should a person do when he believes he is being charged too high a rate of interest for a loan by a lending insitution?
A
Notify the local Better Business Bureau.
B
Accept the loan but pay it off early.
C
Ask the lending institution to lower its rates.
D
Notify the lending institution about state usury laws.
*select an answer for all questions
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